q4 & full year fy2016 earnings · q4 & full year fy2016 earnings. 2 dynamatic taking off ....

Q4 & FULL YEAR FY2016 EARNINGS

2

Dynamatic Taking Off

Q4 FY2016 PERFORMANCE HIGHLIGHTS (Q-o-Q)

Significantly improved all round performance

3

62%18%

20%

29%

20%

51%

Revenue: Rs.

3,871 mn*

+6.8% Q-o-Q

EBITDA: Rs.

548 mn*

Margin: 14.2%

+525 bps

66%

18%

16%

64%

18%

18%

Revenue Breakup

Automotive Hydraulics Aerospace & Defence

Rs. 2,405 mn

+ 3.0%

Rs. 683 mn

+ 9.7%

Rs. 783 mn

+ 17.6%

Rs. 110 mn

Margin: 16.1%

+ 536 bps

Rs. 157 mn

Margin: 6.5%

+ 306 bps

Rs. 281 mn

Margin: 35.9%

+ 965 bps

* Above breakup excludes Other revenue and Other EBITDA

PERFORMANCE HIGHLIGHTS

Management Commentary

Commenting on the results, Mr. Udayant Malhoutra, CEO and Managing Director said:

“FY2016 which started off on a weak note has ended with a very strong all round performance.

Dynamatic is taking off from a strong platform that we have established over years. In particular,

in the Aerospace segment, we have made investments over the past two years in building

capacities for the execution of our strong order book from Airbus, Bell and Boeing Chinook.

During Q4 FY2016, we started commercial deliveries for our projects to Boeing Chinook which

resulted in a robust topline performance and improved profitability. We expect this performance to

improve further as we continue to execute our order book.

Agriculture sector in India remained under pressure due to weak monsoon over the past two

years which had an adverse impact on our Hydraulic segment performance. However, now that

this year is expected to experience better rainfall, we see improvement in sentiment. We see early

signs of revival which was reflected in our Hydraulic segment Q4 performance. Recovery in the

global auto sector was fragmented which had a bearing on our Auto segment performance.

Outlook for the Auto sector is stable as we received new orders and execute the current ones.

On the capital structure front, we concluded a 10-year long term financing arrangement with

certain financial institutions at competitive interest rates. This will result in significant interest cost

savings going forward.

We are pleased with the all round progress we have made during FY2016 as it demonstrates the

inherent strength of our business segments. Dynamatic is Taking Off to move into the next orbit of

growth from here.”

4

PERFORMANCE HIGHLIGHTS

Foreign Exchange Fluctuation

5

Impact due to change in average exchange rates (Y-o-Y)

• FY2016 Revenue of Rs. 14,938 million compared with FY2015 represented a decline of Rs. 1,354

million. Revenue growth was impacted due to unfavorable foreign exchange fluctuation of Rs. 585

million, in particular EURO-INR

• FY2016 EBITDA of Rs. 1,410 million compared with Rs. 1,514 million in FY2015 representing a

decline of Rs. 100 million. Of this total decline Rs. 26 million was due to unfavourable foreign

exchange fluctuation, in particular EURO-INR

Exchange

Rate

Q4

FY2016

Q4

FY2015Impact Impact % FY2016 FY2015 Impact Impact %

EURO vs. INR 72.31 77.47 (5.16) (6.7)% 72.31 77.47 (5.16) (6.7)%

GBP vs. INR 98.76 98.56 0.20 0.2% 98.76 98.56 0.20 0.2%

USD vs. INR 65.46 61.15 4.31 7.1% 65.46 61.15 4.31 7.1%

Q4 FY2016 FY2016

Particulars Erla DL UK JFTLTotal

ImpactErla DL UK JFTL

Total

Impact

Currency EURO GBP EURO EURO GBP EURO

Revenue (Rs. mn) (145.5) 1.1 (10.1) (134.6) (593.6) 4.6 (51.7) (584.7)

EBITDA (Rs. mn) (11.4) 0.2 (10.1) (1.5) (31.1) 0.5 (51.7) (26.3)

FINANCIAL PERFORMANCE SUMMARY

Rs. million

Q4 y-o-y

Growth

(%)

Q3 q-o-q

Growth

(%)

Full Year y-o-y

Growth

(%)FY16 FY15 FY16 FY16 FY15

Revenue 3,878 3,885 (0.2)% 3,628 6.9% 14,938 16,292 (8.3)%

EBITDA 528 331 59.4% 300 75.6% 1,411 1,514 (6.8)%

Margin (%) 13.6% 8.5% 8.3% 9.4% 9.3%

Profit After Tax (PAT) 192 50 281.2% 25 681.5% 123 286 (57.1)%

Margin (%) 5.0% 1.3% 0.7% 0.8% 1.8%

Basic EPS (Rs.) 30.30 7.95 281.2% 3.88 681.5% 19.36 47.28 (59.1)%

Adjusted PAT 192 50 281.2% 25 681.5% 123 177 (30.6)%

Margin (%) 5.0% 1.3% 0.7% 0.8% 1.1%

• Q4 FY2016 Revenue growth picked up when compared to Q3 FY2016 as orders in the

Aerospace segment ramp up and deliveries start to happen. Hydraulic and Automotive

segment also showed signs of improvement

• EBITDA margin improved significantly as capacity utilization across segments improve

in particular, the Aerospace division

Consolidated Performance Highlights

6

Adjusted PAT: Excludes exceptional item adjusted for tax using effective tax rate

AEROSPACE AND DEFENCE SEGMENT

Rs.

million

Q4 y-o-y

Growth

(%)

Q3 q-o-q

Growth

(%)

Full Year y-o-y

Growth

(%)FY16 FY15 FY16 FY16 FY15

Revenue 783 645 21.4% 665 17.6% 2,698 2,617 3.1%

India 521 300 73.8% 352 48.3% 1,475 1,173 25.7%

UK 262 345 (24.1)% 314 (16.7)% 1,223 1,444 (15.3)%

EBITDA 281 145 94.2% 174 60.9% 764 639 19.5%

Margin (%) 35.9% 22.4% 26.2% 28.3% 24.4%

India 257 109 135.7% 135 90.1% 598 445 34.5%

Margin (%) 49.3% 36.4% 38.5% 40.5% 37.9%

UK 24 36 (33.3)% 39 (39.7)% 166 195 (14.8)%

Margin (%) 9.0% 10.3% 12.5% 13.5% 13.5%

Financial Overview

7

Performance Overview

• Revenue growth driven by strong order book execution and deliveries in India. Ramp-up in UK expected

from FY17 onwards

• EBITDA margin improved due to higher capacity utilization and improved performance in India

• Outlook: Strong order book in excess of Rs 60 billion. New enquiries and orders to further strengthen the

order book

• Strategy: Ramp-up of the state-of-the-art Bangalore facility; developing capabilities in large aero-structural

assemblies, composites, and high precision areo-structure design and engineering

Q4 FY16 Revenue

Breakup

India67%

UK33%

HYDRAULICS SEGMENT

Financial Overview

8

Rs.

million

Q4 y-o-y

Growth

(%)

Q3 q-o-q

Growth

(%)

Full Year y-o-y

Growth

(%)FY16 FY15 FY16 FY16 FY15

Revenue 683 663 3.1% 623 9.7% 2,614 2,922 (10.5)%

India 423 395 7.0% 398 6.2% 1,655 1,785 (7.3)%

UK 261 268 (2.7)% 225 15.9% 959 1,137 (15.6)%

EBITDA 110 90 22.7% 67 64.2% 326 341 (4.4)%

Margin (%) 16.1% 13.6% 10.8% 12.5% 11.7%

India 76 69 10.1% 70 9.0% 283 283 0.0%

Margin (%) 18.0% 17.5% 17.6% 17.1% 15.8%

UK 34 21 65.0% -3 nm 43 58 (26.0)%

Margin (%) 13.1% 7.7% (1.3)% 4.5% 5.1%

• Hydraulics segment experienced early signs of recovery in the industry environment both in the UK and

India. UK business was also benefited by new order wins

• Higher sales and product mix change resulted in improved EBITDA margins

• Outlook: Demand pick up in the domestic construction equipment and infrastructure industries to drive

growth in near term

• Strategy: Focus on OEM market and exports. Growth through replacement market and lean manufacturing

systems


Q4 FY16 Revenue

Breakup

India62%

UK38%

AUTOMOTIVE SEGMENT

9

Financial Overview

Rs.

million

Q4 y-o-y

Growth

(%)

Q3 q-o-q

Growth

(%)

Full Year y-o-y

Growth

(%)FY16 FY15 FY16 FY16 FY15

Revenue 2,405 2,578 (6.7)% 2,335 3.0% 9,604 10,756 (10.7)%

India – M 218 286 (23.6)% 234 (6.7)% 985 1,235 (20.3)%

India – F 87 118 (26.0)% 62 40.5% 305 355 (14.0)%

Germany 2,100 2,175 (3.5)% 2,039 3.0% 8,315 9,168 (9.3)%

EBITDA 157 140 12.3% 81 93.9% 393 531 (26.0)%

Margin (%) 6.5% 5.4% 3.5% 4.1% 4.9%

India – M (20) (22) nm (20) nm (105) (70) nm

Margin (%) nm nm nm nm nm

India – F 16 5 197.5% 28 (42.8)% 65 3 nm

Margin (%) 18.1% 4.5% 44.5% 21.4% 0.8%

Germany 161 156 3.2% 73 119.2% 433 598 (27.6)%

Margin (%) 7.7% 7.2% 3.6% 5.2% 6.5%

Note:

India – M: India – Machining

India – F: India – Iron Foundry

• Recovery in the global auto sector remains fragmented. This had an adverse impact on the Company’s

performance during FY2016; however margins were sustained

• India margins improved primarily due to higher foundry volumes and decline in raw material prices;

Germany margins were sustained due improved product mix and operational efficiencies

• Outlook: New order wins in Germany to drive both revenue and profitability in FY17

• Strategy: Focus on high margin product mix, exports, ramp-up of existing products, performance-critical

components, customer diversification, steel castings and capacity utilization


Q4 FY16 Revenue

Breakup

India12%

Germany88%

Revenue (Rs. mn) and Growth (Q-o-Q)

QUARTERLY FINANCIAL TRENDS

Q4 FY16 performance show an improving trend

Segment Wise Revenue Contribution

EBITDA (Rs. mn) and Margin (%)

10

3,885

3,728 3,7043,628

3,878

1.3%

(4.0)%

(0.7)% (2.0)%

6.9%

Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16

66% 67% 64% 65% 62%

17% 17% 19% 17% 18%

17% 16% 18% 18% 20%


Automotive Hydraulics Aerospace & Defence

331

245

338300

528

8.5%6.6%

9.1% 8.3%

13.6%


Focus on Deleveraging the Balance Sheet

QUARTERLY FINANCIAL TRENDS

Capital Structure Interest Expense (Rs. mn) & Interest

Coverage (x)

Net Debt/LTM EBITDA & Debt/Equity (x) Management Perspectives

(Rs. million) Mar 31, 2016 Dec 31, 2015 Mar 31, 2015

Long Term

Borrowings5,038 5,044 3,766

Short Term

Borrowings920 966 1,397

Total Debt 5,958 6,010 5,163

Less: Cash &

Cash Equivalents627 546 761

Net Debt 5,331 5,464 4,402

Net Worth 2,576 2,445 2,517 Note: Interest Coverage ratio = Operating Profit/Interest Expense

11

• Concluded a 10-year long term financing

agreement with ICICI Bank, Axis Bank and

IndusInd Bank at competitive interest rates which

will result in:

o Reduced interest cost

o Favorable repayment terms

o Availability of internal accruals for growth

capital

186 193 182 175 177

1.1x0.6x

1.1x 1.0x

2.2x


2.1x2.5x 2.3x

2.9x

4.5x

3.8x

Q4 FY15 Q3 FY16 Q4 FY16

Debt/Equity Net Debt/LTM EBITDA

DYNAMATIC OVERVIEW

Competitive

market

position

• One of the world’s largest manufacturers of hydraulic gear pumps and automotive

turbochargers; leadership in hydraulic gear pumps market for over 35 years

• Has 65% share of the Indian organized tractor market, supplies to almost all OEMs in India

• Pioneer and leader in the Indian private sector for manufacture of high precision airframe

structures and aerospace components. Tier I supplier to the global aerospace OEMs such

as Airbus, Boeing, Bell Helicopters and HAL

• Manufactures high precision, complex metallurgical ferrous and aluminium castings for

performance critical components such as turbochargers and exhaust manifolds and has

capabilities to develop automotive components on single-source basis

• A combination of stable and high growth businesses with highly engineered products for the

automotive, hydraulic, aerospace and defense industries

• Successful track record of enhancing manufacturing capabilities through R&D and selective

acquisitions

Diversified

business

• Automotive facilities in Chennai, one of India’s major automotive hubs and in Germany, a

global auto OEM hub

• Aerospace and Defense facilities in Bangalore, headquarters of primary clients and in

Bristol, UK’s south west aerospace hub

Locational

advantages

12

DYNAMATIC OVERVIEW

R&D and

Intellectual

Property

• Owns 17 patents for various products in India and internationally

• Has the design IP for all the products manufactured in the Hydraulics segment

• R&D units recognized by Department of Scientific and Industrial Research, Government of

India

• Advanced iron foundry in India and Germany. Also has aluminium foundry in India for

captive use

• Owns one of the most advanced ferrous foundries in Europe (Germany) capable of

manufacturing highly intricate castings

• In-house division for design validation and optimization, analysis and prototypes

• Has 11 facilities across India (Bangalore, Chennai, Coimbatore, Nasik), UK (Swindon,

Bristol) and Germany (Schwarzenberg)

Vertically

Integrated

Facilities

Blue Chip

Customers

• Automotive: Audi, BMW, Daimler, Ford, Hyundai, Nissan, Tata Motors, Volkswagen

• Hydraulics: Caterpillar, Cummins, Eicher, Escorts, John Deere, Mahindra & Mahindra, New

Holland Fiat , Same Deutz-Fahr

• Aerospace and Defence: Airbus, Bell Helicopter, Boeing, GKN Aerospace, HAL, Spirit

Aerosystems

• Highly qualified board and management team with significant industry experience

• 5 out of 11 Directors Independent as of May 27, 2016

Board and

Management

13

DYNAMATIC OVERVIEW

Combination of Stable and High Growth Businesses

AUTOMOTIVE

64% of FY16

Revenue

• Ferrous and non-ferrous

automotive components including

engine, transmission,

turbocharger and chassis parts

• Metallurgical ferrous and

aluminium castings

HYDRAULICS

18% of FY16

Revenue

• Hydraulic valves

• Hydraulic gear pumps

• Combined displacement pump

packages

• Fan drive systems

• Fixed displacement pumps

AEROSPACE

& DEFENCE

18% of FY16

Revenue

• Wings, rear fuselages, ailerons,

wing flaps and major airframe

structures

• Ramp structure assembly

• AFT Pylon assembly

• Defense products and solutions

14

• Audi

• BMW

• Daimler

• Ford

• Hyundai

• Nissan

• Tata Motors

• Volkswagen

• Caterpillar

• Eicher

• Escorts

• John

Deere

• Mahindra &

Mahindra

• New Holland

Fiat

• Same Deutz-

Fahr

• Airbus

• Boeing

• Bell

• Sprint

• HAL

BLUE CHIP INVESTOR BASE

Key Institutional Investors

Shareholders Mar-15 Sep-15 Mar-16

Promoters 51.1% 51.1% 51.1%

FIIs 15.2% 14.3% 14.5%

DIIs 6.8% 7.8% 11.2%

Others 26.9% 26.8% 23.2%

Total 100.0% 100.0% 100.0%

Shareholding Pattern Trend Equity History

Year Event

Equity

Capital

(Rs. mn)

1974 Initial Public Offering 2.9

1987 Rights Issue 11.2



1995 Bonus Issue 41.9

2008 Amalgamation 48.1

2008 Qualified Institutional Placement 54.1

2014 Preferential convertible warrants 60.4

2014 Qualified Institutional Placement 63.4

Shareholding Structure

15

• Samena Capital and Group

• HDFC Mutual Fund

• Alchemy and Group

• Goldman Sachs Group

• SBI Mutual Fund

• Param Capital and Group

• L&T Mutual Fund

Promoters51%

FIIs15%

DIIs11%

Others23%

FINANCIAL STATEMENTS

Profit & Loss Statement (Rs. million) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16

Revenues

Net Sales / Income from Operations (Net of Excise Duty) 3,838 3,691 3,670 3,598 3,847

Other Operating Income 47 37 33 30 32

Total Revenues 3,885 3,728 3,704 3,628 3,878

Expenses

Cost of Raw Materials Consumed 2,249 2,180 2,042 2,150 2,103

Changes in Inventories of Finished Goods, WIP and Stock in Trade (68) (29) 9 (77) (14)

Employee Benefit Expenses 572 549 542 542 559

Other Expenditure 801 783 772 712 703

Total expenses 3,554 3,483 3,366 3,327 3,351

Operating Profit (EBITDA) 331 245 338 300 528

Depreciation and Amortization Expenses 134 129 130 127 138

EBIT 197 116 208 173 390

Other Income 64 11 6 4 28

Finance Costs 186 193 182 175 177

PBT – Pre Exceptional 76 (66) 32 2 241

Exceptional (Gain)/ Losses 0 0 0 0 0

PBT 76 (66) 32 2 241

Tax Expenses 25 31 29 (22) 49

PAT 50 (97) 3 25 192

Basic EPS (Rs) 7.95 (15.31) 0.50 3.88 30.30

Margins (%)

Gross Margins 43.9% 42.3% 44.6% 42.9% 46.1%

EBITDA margins 8.5% 6.6% 9.1% 8.3% 13.6%

PAT margins 1.3% (2.6)% 0.1% 0.7% 5.0%

Y-o-Y Growth (%)

Total Revenues (9.7)% (12.3)% (14.2)% (5.4)% (0.2)%

EBITDA (22.3)% (47.1)% (9.6)% (12.3)% 59.4%

PAT (61.8)% nm (99.1)% 328.5% 281.2%

Q-o-Q Growth (%)

Total Revenues 1.3% (4.0)% (0.7)% (2.0)% 6.9%

EBITDA (3.5)% (26.0)% 38.1% (11.1)% 75.6%

PAT 778.6% nm nm 680.1% 681.5%

Effective Tax Rate 33.6% nm 90.1% nm 20.4%

Income Statement (Quarterly Trend)

16


Profit & Loss Statement (Rs. million) FY15 FY16

Revenues

Net Sales / Income from Operations (Net of Excise Duty) 16,115 14,806

177 132

Other Operating Income 16,292 14,938

Total Revenues

Expenses

Cost of Raw Materials Consumed 9,552 8,502

Changes in Inventories of Finished Goods, WIP and Stock in Trade (96) (111)

Employee Benefit Expenses 2,360 2,192

Other Expenditure 2,962 2,945

Total expenses 14,778 13,527

Operating Profit (EBITDA) 1,514 1,410

Depreciation and Amortization Expenses 509 524

EBIT 1,005 886

Other Income 103 50

Finance Costs 799 727

PBT – Pre Exceptional 308 208

Exceptional (Gain)/ Losses (191) 0

PBT 499 208

Tax Expenses 213 86

PAT 287 122

Basic EPS (Rs) 47.28 19.36

Margins (%)

Gross Margins 42.0% 43.8%

EBITDA margins 9.3% 9.4%

PAT margins 1.8% 0.8%

Y-o-Y Growth (%)

Total Revenues (5.9)%

EBITDA (13.4)%

PAT (11.2)%

Effective Tax Rate 42.6% 41.3%

Income Statement (Annual Trend)

17


Balance Sheet (Rs. million) Sep-14 Mar-15 Sep-15 Mar-16

ASSETS

Non-Current Assets

Goodwill 679 879 950 936

Fixed Assets 5,822 5,600 5,685 5,617

Non-Current Investment 0 0 0 1

Deferred tax asset (net) 5 0 0 0

Long Term Loans and Advances 273 242 223 260

Other Non Current Assets 79 161 139 128

Total Non-Current Assets 6,858 6,882 6,998 6,942

Current Assets

Inventories 2,257 2,272 2,504 2,561

Trade Receivables / Sundry Debtors 1,020 1,131 1,049 1,228

Cash and Cash Equivalents 557 761 432 627

Short-Term Loans and Advances 352 314 351 345

Other Current Assets 254 138 179 111

Total Current Assets 4,440 4,616 4,514 4,873

TOTAL ASSETS 11,298 11,498 11,512 11,814

Balance Sheet – Assets

18

FINANCIAL STATEMENTSBalance Sheet – Liabilities

Balance Sheet (Rs. million) Sep-14 Mar-15 Sep-15 Mar-16

EQUITY and LIABILITIES

Shareholders Fund

Share capital 60 63 63 63

Reserves and surplus 2,134 2,453 2,397 2,513

Money Received against Share Warrants 0 0 0 0

Non-controlling interest (Preference capital) 26 4 0 0

Total Shareholders Fund 2,220 2,520 2,460 2,576

Non-Current Liabilities

Long-Term Borrowings 3,005 2,658 3,977 3,999

Deferred Tax Liabilities (net) 278 276 282 253

Other Long Term Liabilities 33 30 32 15

Long Term Provisions 37 68 67 78

Total Non-Current Liabilities 3,352 3,032 4,358 4,345

Current Liabilities

Short-Term Borrowings 1,265 1,397 956 920

Trade Payables 2,617 2,743 1,907 2,396

Other Current Liabilities 1,578 1,580 1,581 1,452

Short-Term Provisions 265 226 251 125

Total Current Liabilities 5,726 5,946 4,694 4,893

TOTAL EQUITY AND LIABILITIES 11,298 11,498 11,512 11,814

19

IMPORTANT NOTICE

This presentation contains statements that contain “forward looking statements” including,

but without limitation, statements relating to the implementation of strategic initiatives, and

other statements relating to Dynamatic Technologies’ (“Dynamatic” or the “Company”)

future business developments and economic performance.

While these forward looking statements indicate our assessment and future expectations

concerning the development of our business, a number of risks, uncertainties and other

unknown factors could cause actual developments and results to differ materially from our

expectations.

These factors include, but are not limited to, general market, macro-economic,

governmental and regulatory trends, movements in currency exchange and interest rates,

competitive pressures, technological developments, changes in the financial conditions of

third parties dealing with us, legislative developments, and other key factors that could

affect our business and financial performance.

Dynamatic Technologies undertakes no obligation to publicly revise any forward looking

statements to reflect future / likely events or circumstances.

20

CONTACT DETAILSMr. Hanuman Sharma

Executive Director and Chief Financial Officer

Dynamatic Technologies Limited

Dynamatic Park Peenya Industrial Area

Bangalore 560 058 India

T: +91 80 2839 4933 / 34 / 35

F: +91 80 2839 5823

E: [email protected]

Mr. Naveen Chandra

Head – Legal, Compliance & Company Secretary

Dynamatic Technologies Limited

Dynamatic Park Peenya Industrial Area

Bangalore 560 058 India

T: +91 80 2839 4933 / 34 / 35

F: +91 80 2839 5823

E: [email protected]

www.dynamatics.net

CIN: L72200KA1973PLC002308

mailto:[email protected]

mailto:[email protected]

q4 & full year fy2016 earnings · q4 & full year fy2016 earnings. 2 dynamatic taking off ....

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